ConsFinancial Statements-Pt 2

Sun Life Fin.Services of Canada Inc
24 October 2001


PART 2


PERFORMANCE BY OPERATING UNIT
  
                                               Third Quarter 2001
                                        Earnings     Equity (1)      ROE
                                          ($mm)        ($mm)         (%)

Canada                                      51          1,273       16.5
United States                               55          1,442       15.1
MFS Investment Management                   58            418       60.4
United Kingdom                              37          1,464       10.7
Asia                                         3            503        2.5
Corporate Capital                           11          2,188        2.1
         Total Company                     215          7,288       12.1
(1) Period end


Three of the Company's operating units, Canada, US and MFS, achieved 
profitability which exceeded the Company's hurdle rate. These units reported 
ROE's of 16.5, 15.1 and 60.4 per cent, respectively, for the third quarter. 
These three units represent a total of $3.1 billion, or 43 percent of the 
Company's total equity.

The Company has taken a series of decisive actions to address the performance of
the remaining three entities:

- UK Operations are in the midst of a significant restructuring including the   
  repatriation of more than $400 million from the recently announced sales of   
  Sun Bank and SLC Asset Management.

- Corporate Capital unit includes approximately $1.5 billion capital held in the
  form of liquid assets identified for imminent deployment in the fourth quarter
  as part of the financing for the purchase of Keyport/IFMG.

- Asia Operations continues to receive investments in infrastructure and market 
  development in aggressive pursuit of longer-term profit opportunities.

 
Canadian Operations
                                Quarterly Results                  YTD
            
                         3Q'01   2Q'01   1Q'01   4Q'00     3Q'00    2001    2000

Revenues ($mm)             896     932   1,030     927       980   2,858   3,019
Net Income ($mm)            51      55      49      62        45     155     122
ROE (%)                   16.5    17.6    13.6    15.8      12.1    15.8    11.1


Canadian Operations earned $51 million in the third quarter of 2001, an increase
of $6 million, or 13 per cent, relative to the $45 million earned in the third 
quarter of 2000. This increase was primarily the result of the improvement in 
earnings from Individual Life and Group Life and Health as a result of reduced 
expenses and improved morbidity and mortality experience.

Year-to-date earnings of $155 million were $33 million higher than the $122 
million earned in the comparable period of 2000. This increase was largely 
attributable to improved earnings in the Individual Life and Group Life and 
Health businesses due to reduced expenses and improved claims experience.

                                Quarterly Results                  YTD
            
($mm)                    3Q'01   2Q'01   1Q'01   4Q'00     3Q'00    2001    2000

Individual Life              7       8      10      42         3      25       6
Group Life & Health         23      23      12      27        18      58      41
Group Retirement Services    9      12      11      15         9      32      30
Spectrum & Other             9       6      10      (8)        8      25      32
Investment Portfolio & Other 3       6       6     (14)        7      15      13
       Total                51      55      49      62        45     155     122


- Individual Life reported earnings of $7 million for the current quarter, an   
  increase of $4 million over the third quarter of 2000 primarily due to        
  improved mortality experience.

- Group Life and Health earned $23 million in the quarter, an increase of $5 
  million compared to the third quarter of 2000 primarily due to better         
  mortality and morbidity experience.

- Group Retirement Services earned $9 million in the third quarter of 2001, the 
  same as the third quarter of 2000.

- Spectrum & Other earnings improved to $9 million in the current quarter from  
  $8 million in the third quarter of 2000. This increase was the result of lower
  expenses in the Individual Annuity business partially offset by lower earnings
  in Spectrum Investments.



United States Annuity and Insurance Operations

                                Quarterly Results                  YTD
            
                         3Q'01   2Q'01   1Q'01   4Q'00     3Q'00    2001    2000

Revenues ($mm)           1,528   1,755   2,021   1,858     1,996   5,304   5,301
Net Income ($mm)            55      27      50      43        63     133     186
ROE (%)                   15.1     7.7    15.8    13.7      21.4    12.8    22.2


US Annuity and Insurance Operations earned $55 million in the third quarter of 
2001 compared to $63 million in the third quarter of 2000, a decrease of $8 
million, or 12 per cent. The decrease was largely a result of earnings declines 
in the Investment Portfolio as well as a decline in Retirement Products and 
Services which was adversely impacted by US equity markets.

Year-to-date earnings of $132 million declined from the $186 million earned in 
the first nine months of 2000. This $54 million decrease was the net result of 
venture capital gains in 2000 which were not repeated in 2001, partially offset 
by lower asset provisions in 2001. Both the venture capital gains and asset 
provisions were recorded on the Investment Portfolio and Other line. In 
addition, earnings from Retirement Products and Services declined while 
Individual Life achieved earnings growth. Individual Life's profitability 
benefited from a larger inforce block of corporate-owned life insurance 
('COLI'). Year-to-date 2001 earnings were also strengthened by higher investment
income and pricing improvements in Group Life and Health.


                                Quarterly Results                  YTD
            
($mm)                    3Q'01   2Q'01   1Q'01   4Q'00     3Q'00    2001    2000

Retirement Products and 
 Services                   15       1      13      15        29      29      58
Individual Life             33      25      23      21        13      81      54
Group Life and Health       11      10       6      12         7      27      13
Investment Portfolio & 
 Other                      (4)     (9)      8      (5)       14      (5)     61
     Total                  55      27      50      43        63     132     186


- Retirement Products and Services reported earnings of $15 million, a decrease 
  of $14 million or 48 per cent relative to the $29 million earned in the third 
  quarter of 2000. The primary factor causing this decrease was a decline in    
  fees related to declining market valuations and favourable actuarial          
  adjustments of $16 million included in third quarter 2000 results.

- Individual Life had another solid quarter earning $33 million, an increase of 
  $20 million, or 154 per cent, relative to the $13 million earned in the third 
  quarter of a year ago. This increase was primarily the result of higher       
  earnings on a larger inforce block of COLI business.

- Group Life and Health earned $11 million in the third quarter, a $4 million, 
  or 57 percent increase relative to $7 million earned in the third quarter of  
  2000. The profitability growth reflects a market environment which            
  accommodated price increases in the Company's stop-loss business. This        
  contribution was partially offset by increased death benefits in the Group    
  Life line of business.



MFS Investment Management

                                Quarterly Results                  YTD
            
                         3Q'01   2Q'01   1Q'01   4Q'00     3Q'00    2001    2000

Revenues ($mm)             541     587     603     614       629   1,731   1,768
Net Income ($mm)            58      65      58      60        72     181     196
ROE (%)                   60.4    75.8    76.6    75.1      86.7    70.3    87.8

MFS earned $58 million in the third quarter, a decline of $14 million, or 19 per
cent, compared to the $72 million earned in the third quarter of 2000. Relative 
to performance in the second quarter of 2001 with earnings of $65 million, 
returns in the third quarter declined by $7 million, or 11 per cent. Two factors
mitigated the severe adverse impact of declining equity valuations in the third 
quarter on MFS' earnings: (1) net funds inflows provided a partial offset to 
asset valuation declines, and (2) aggressive cost control contributed to 
enhanced profit margins.

Year-to-date earnings of $181 million were $15 million less than the $196 
million earned in the first three quarters of 2000. Lower revenues due to 
declining equity valuations were only partially offset by lower expenses due to 
spending constraints.


                                Quarterly Results                  YTD
            
                         3Q'01   2Q'01   1Q'01   4Q'00     3Q'00    2001    2000
     
Net Income (C$mm)           58      65      58      60        72     181     196
Assets Under Management 
 (C$B)                     194     222      210    223       240     194     240
Net New Sales (C$Billion)  3.9     7.8     12.4    8.0       8.9    24.1    23.6
Market Movement
 & Currency Fluctuations
  (C$B)                   (31.7)   3.6    (24.8) (24.9)      4.0   (52.9)   15.5


- Net new sales for the quarter were $3.9 billion (US$2.5 billion).

- No.2 ranking for net new retail mutual fund flows in the non-proprietary      
  channel with inflows of US$5.3 billion (year-to-date August, 2001)

- Captured 12 per cent of the retail mutual fund industry's net funds flows     
  through the non-proprietary channel with US$5.3 billion (year-to-date August, 
  2001 funds flows).

- Market share in the advice-driven channel grew to 6.8 per cent (year-to-date, 
  August, 2001), up from 6.4 per cent in 2000.

- No.5 ranking for overall mutual fund net new flows at US$5.7 billion (year-to-
  date August, 2001).

- No.9 ranking by size among US mutual fund companies with US$81 billion in long
  term mutual fund assets under management (August 31, 2001).


United Kingdom Operations
 
                                Quarterly Results                  YTD
            
                         3Q'01   2Q'01   1Q'01   4Q'00     3Q'00    2001    2000
     
Net Income ($mm)            37      50      39      37        32     126      82
ROE (%)                   10.7    15.2    12.0    11.7      10.7    12.6     9.0

     
Earnings for the UK were $37 million in the third quarter of 2001, an increase 
of $5 million, or 16 per cent, relative to earnings of $32 million in the third 
quarter of 2000. This earnings increase primarily resulted from significant cost
savings which accompanied the Company's exit from the direct sales force 
business in the first quarter of this year.

On February 15, 2001, Sun Life Financial announced its decision to exit the 
direct sales force distribution business in the UK. The sales force was 
terminated on March 30, 2001.

Year-to-date earnings in 2001 increased by $44 million to $126 million from $82 
million for the first nine months of 2000. This increase in earnings was 
primarily due to reduced income taxes in 2001 following the resolution of a 
previously outstanding issue.

Net income for the UK declined by $13 million, or 26 per cent, in the third 
quarter to $37 million as compared with earnings in the second quarter of 2001 
of $50 million. This earnings decline resulted from the adverse impact of equity
market declines on the unit-linked business.

The recently announced sales of Sun Bank and SLC Asset Management had no impact 
on third quarter net income. Both sales, which will create gains, are expected 
to close in the fourth quarter. Combined net income for the two subsidiaries was
$8 million in the third quarter, equal to their combined earnings in the second 
quarter of this year.


Asian Operations

                                Quarterly Results                  YTD
            
                         3Q'01   2Q'01   1Q'01   4Q'00     3Q'00    2001    2000

Revenues ($mm)             107     106     103     115       103     316     298
Net Income ($mm)             3      10       8       6         9      21      21
ROE (%)                    2.5     8.6     7.5     6.0       8.5     6.1     6.8


Earnings for Asia in the third quarter were $3 million, a decrease of $6 
million, or 67 per cent relative to earnings of $9 million in the third quarter 
of 2000. This decrease was largely the result of a similar decline in earnings 
in the Company's Philippines operations. Earnings in the Philippines were 
adversely impacted by a decline in investment income which resulted from the 
broad retreat in the Philippines equity markets. Third quarter income in 2001 
was also reduced by higher expenses in Hong Kong associated with development 
initiatives. Year-to-date earnings of $21 million were equal to the comparable 
period of 2000.

Asia's earnings include the impact of continuing investments in the Asian market
in pursuit of longer-term growth prospects. Investments to develop the Hong Kong
market were particularly significant in the third quarter results.


Corporate Capital

Corporate capital includes those operations for which management responsibility 
resides at the Company Centre.

                                Quarterly Results                  YTD
            
                         3Q'01   2Q'01   1Q'01   4Q'00     3Q'00    2001    2000

Net Income ($mm)            11       5      (2)      3       (18)     14    (26)
ROE (%)                    2.1     1.0     n/a      .9       n/a      .9     n/a

     
     
Corporate Capital reported earnings of $11 million in the third quarter of 2001 
compared to a loss of $18 million in the comparable period a year earlier. The 
loss reported in the third quarter of 2000 included a special asset provision of
$19 million. Investment income declined by $10 million reflecting lower average 
investment yields as assets were shifted to short-term securities in preparation
for the Keyport acquisition and the impact of declines in the international 
equity markets. Offsetting the reduction in investment income was a reduction in
income taxes of $10 million due to the re-evaluation of several potential income
tax liabilities.


Shareholders' Equity

Shareholders' equity was $7,288 million at September 30, 2001, an increase of 
$846 million from September 30, 2000. Return on equity ('ROE') for the third 
quarter of 2001 was 12.1 per cent, down from the 12.3 per cent achieved in the 
second quarter of 2001. ROE declined despite a $3 million increase in net 
income, as shareholders' equity increased by $459 million, which included a $295
million increase resulting from currency translation. The increase reflected a 
weaker Canadian dollar relative to the US dollar at September 30, 2001. This 
$295 million adjustment to shareholders' equity due to currency translation 
affected only balance sheet items and had no impact on net income. The average 
Canadian/US dollar exchange rate, used for the calculation of income items, was 
unchanged from the second to the third quarters.